Behavioral lessons from Flipkart’s Big-Billion Day sale

Abstract

Purpose The purpose of this paper is to understand the behavioral lessons and managerial implications of deep discount strategies used by e-commerce firms to gain a competitive advantage over rivals. The paper seeks to understand the behavioral aspects of consumer and competitor response to such online sales, particularly with reference to e-satisfaction and e-loyalty. The case study seeks to: understand the behavioral aspects of utility and customer satisfaction; understand the behavioral aspects influencing customer attitudes, preferences and choice; understand heuristics involved in consumer decision-making; and understand possible firm strategies based on a thorough analysis of behavioral influencers of customer decisions. Design/methodology/approach The paper follows a case study approach. Secondary data sources from the library, company website and newspaper articles have been used to build a case which would encourage students to discuss and analyze the application of principles of behavioral economics to marketing problems faced especially by e-retailers. It uses Flipkart’s botched-up Big-Billion Day sale to drive home lessons in behavioral economics to marketers. Findings With growing internet penetration, e-retail presents high potential in India along with its BRICS peers. However, the task of grabbing customer mindshare, as also a share of wallet of the growing Indian purchasing power through monster discounts and deals by e-tailers may not work. Firms such as Flipkart may strategize using principles of behavioral economics including confirmatory bias, framing effects, reference points, principles of loss aversion, heuristics and the peak–end rule to influence customer decision-making in their favor. They must also guard against any incidents/events which invoke the representativeness heuristic or negative confirmatory biases towards e-commerce portals. Practical implications E-tailers in countries like India should understand the behavioral implications of deep discount strategies and deals offered by them as a means of gaining competitive advantage. Attention to e-service outcome quality and e-service recovery is important. Originality/value The case is unique in its applications of behavioral economics principles to e-retailing in India. It seeks to apply behavioral principles to a major e-commerce marketing event in India. With the e-commerce industry likely to boom in India, the case study provides unique insights into competitive pricing strategies adopted by e-retailers and the feasibility thereof.

Behavioral response to online pricing: empirical and managerial insights

“…Bronnenberg and Wathieu (1996), Briesch et al (1997), Mazumdar and Papatla (2000), Erdem et al (2001), Han et al (2001), Kivetz et al (2004), Moon et al (2006), Terui and Dahana (2006), Pauwels et al (2007), Newman and Newman (2007), Habib and Miller (2009), Masiero and Hensher (2010), Ataman and Rooderkerk (2010), Rose and Masiero (2010), Delle Site and Filippi (2011), Nicolau (2011), Neumann et al (2012), Koppalle et al (2012), Dayaratna and Kannan (2012) and Hu et al (2012) have found robust empirical support for the asymmetric effect of price increases and decreases, and for loss aversion. Jayakumar (2016) documented behavioral lessons from Flipkart’s Big-Billion Day sale in India and recommended that e-tailers should use the principles of behavioral economics, including framing effects, reference price and principles of loss aversion to influence customer decision-making in their favor.…”

“…, Rose and Masiero (2010), DelleSite and Filippi (2011), Nicolau (2011), Neumann et al (2012,Koppalle et al (2012),Dayaratna and Kannan (2012) andHu et al (2012) have found robust empirical support for the asymmetric effect of price increases and decreases, and for loss aversion Jayakumar (2016). documented behavioral lessons from Flipkart's Big-Billion Day sale in India and recommended that e-tailers should use the principles of behavioral…”

“…In 2020, India had around 700 million internet users which is likely to reach 970 million users by 2025 (Sriram, 2020). With growing internet penetration, e-retail presents high potential in India (Jayakumar, 2016).…”

The influence of internet marketing capabilities on international market performance

“…Influence of internet marketing management has often been the main concern (Agnihotri et al, 2016;Jayakumar, 2016;Srinivasan and Moorman, 2005). IT-enabled customer management is crucial for customer satisfaction and online business sales success (Jayakumar, 2016).…”

“…Influence of internet marketing management has often been the main concern (Agnihotri et al, 2016;Jayakumar, 2016;Srinivasan and Moorman, 2005). IT-enabled customer management is crucial for customer satisfaction and online business sales success (Jayakumar, 2016). Since the start of public use of the internet in the early 1990s, this technology has been popularized and widely adopted as the core of globalization for firms to interact with their clients and other internal and external stakeholders, with the purpose of transforming social relations' resources into corporate sales (Agnihotri et al, 2016;Zhao and Wu, 2014).…”